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The Quadriga Lock Out: Cruel victims of cold wallets or the latest high profile Bitcoin fraud?

Canadian cryptocurrency exchange QuadrigaCX may well owe its customers $250 million but following the death of their CEO apparently no one knows the password required to access it.  This may sound incredible – especially given the amount of money involved – but according to reports the story is as true as it is unbelievable. 

The fact Quadriga’s accounts hold more than $180 million in virtual currencies isn’t in question.  However, following their CEO Gerald Cotton’s sudden death in December 2018 from Crohn’s Disease the company has claimed no one has the passwords required to access customer funds. 

As a result on the 31st January QuadrigaCX told the public they had lost access to its cryptocurrency reserves and would be taking the exchange offline before promptly filing for creditor protection with a Canadian higher court in Nova Scotia.

Under Canadian law that creditors protection would help Quadriga avoid immediate legal action from its debtors, an estimated 115,000 users who – according to initial estimates - are owed approximately $250 million in total.  A large number of those users have not been deterred by the protection afforded by the court and have taken to social media to question whether Gerald Cotton is really dead and demand evidence to prove he is.

And they may have a point. 

This isn’t the first time Quadriga has found itself under scrutiny.  In early 2018 the CIBC (Canadian Imperial Bank of Commerce) froze 388 accounts worth $28 million saying they were confused over the ownership of the funds within them.   Although Quadriga was quick to promote the fact a court in Ontario called for their release, the seeds of scepticism had been sown. 

Not surprisingly, following the recent reports of Mr Cotton’s death rumours have quickly surfaced that Quadriga may have stashed funds in a range of locations (within the last couple of days according to some sources), rumours the Canadian authorities are expected to investigate.

Moreover one observer – Redditor – has claimed there has been evidence of very recent activity in Quadriga’s ‘cold wallets’.  If that is true all of the assertions claiming the wallets are inaccessible would dissolve.

Meanwhile even more fuel has been poured on the fire after Crypto news outlet Medium has posted they have evidence the some of the ‘cold wallets’ probably don’t even exist and Quadriga is actually little more than a Ponzi scheme.

Irrespective of the insinuations being made in the background the story itself became even more curious.   It was revealed that at the time the company was filing for creditors protection Mr Cotton's widow, Jennifer Robertson, was filing an affidavit to attempt to explain the reason why the funds were missing saying:

"The laptop computer from which Gerry carried out the Companies' business is encrypted and I do not know the password or recovery key.  Despite repeated and diligent searches, I have not been able to find them written down anywhere."

Ms Robertson went on to say she has hired external outside security experts to try and hack the computer but up to this point only the cryptocurrency stored on Quadriga's online server has been retrieved.  It appears the majority of funds had been stored in the "cold wallets" Mr Cotton set up to keep the content safe from hackers; somewhat ironic given the current state of affairs.

Irrespective of the irony – or indeed the claims of foul play – it looks likely that over 115,000 users will never be able to recover their money. 


Whether or not the protests of Quadriga and Ms Robertson are true, this catastrophe is yet another timely reminder that while Bitcoin and the other cryptocurrencies offer significant rewards, there are also severe risks involved.  If you feel you have been a victim of a Bitcoin or cryptocurrency fraud, please call us today on 020 7792 5649 or email us at This email address is being protected from spambots. You need JavaScript enabled to view it..

We will help. 

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MLA 2017 18 Shortlisted 2